A Philosophical View of the Economy

THE British philosopher A.N. Whitehead had many wise things to say about business and society. One of his wisest observations was his statement that a great society is one in which its busi- ness leaders “think greatly of their functions.” When they fail, Whitehead concludes, the consequences are “orgies of exploitation” followed by “a descending standard of living.”

This philosophical way of thinking about business and society is strikingly different from the dominant view of economists and politicians. They favor a more technical picture of economies operating in accord with impersonal laws. In this view economies are semi-autonomous entities obeying laws that are independent of the norms, mores and characters of the societies in which they are embedded. The moral vision of the nation’s business leaders carries little economic weight.

THE British philosopher A.N. Whitehead had many wise things to say about business and society. One of his wisest observations was his statement that a great society is one in which its busi- ness leaders “think greatly of their functions.” When they fail, Whitehead concludes, the consequences are “orgies of exploitation” followed by “a descending standard of living.”

This philosophical way of thinking about business and society is strikingly different from the dominant view of economists and politicians. They favor a more technical picture of economies operating in accord with impersonal laws. In this view economies are semi-autonomous entities obeying laws that are independent of the norms, mores and characters of the societies in which they are embedded. The moral vision of the nation’s business leaders carries little economic weight.

All of our great global economies — the United States, Japan, China, Europe and India — are perplexed today about what strategies will restore them to the path of healthy vigorous growth. There’s a lot of controversy about how to accomplish this goal, particularly between those who favor austerity and those who favor Keynesian stimulus. The controversy is shot through and through with partisan ideology, creating anger and bitterness on both sides.

I believe that a philosophical perspective can clarify some of the perplexity. The preponderance of economic decision-making in today’s world is more moralistic than economic. German Chancellor Angela Merkel’s insistence on austerity for Greece, Spain and other Southern European economies is based more on A Philosophical View of the Economy By Daniel Yankelovich

Germany’s moral condemnation of countries who live beyond their means than on technical economic considerations. American conservatives who put reducing the budget deficit ahead of taking on more debt to stimulate the economy essentially are making moral judgments. Japan’s long hesitancy to reform its banking system reflects national traits of character more than technical economic judgments.

From an economist’s point of view, all of this moralizing is a frustrating diversion from the laws of economics. From a philosophical point of view, one might reach the opposite conclusion. If the moral judgments are seen as “politics getting in the way of sound economic policies” (the economist’s view) then there is no need to examine them closely and get them right. But if the right kind of social mores turn out to be the key to sound economic policies, it would be prudent to pay more careful attention to them.

In today’s American economy, issues such as high rates of unemployment, increasing inequality, decreasing social mobility, neglected tax reform, returns to capital far outstripping returns to labor, and so forth, are moral flaws that inevitably will lead to extreme politics. It would, of course, be downright perverse to neglect the laws of economics, but it would be equally perverse to neglect the laws of social justice. These are just as germane to planning economic growth as considerations of supply and demand. Ignore them, and they will breed abuses; take them into account, and they will help to clarify the right strategies.

If our economies are to return to the path of healthy vigorous growth, the CEOs who run our great corporations must think greatly of their functions. tj

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Tokyo Journal columnist Daniel Yankelovich is a renowned social researcher and public opinion analyst who was born in 1924 in Boston, Massachusetts. He earned both his bachelor's degree (1946) and M.A.(1950) from Harvard University, and carried out post-graduate studies at the Sorbonne in Paris. He also holds honorary doctorates from Washington University and George Washington University largely for his work in the public sector.

He has served in the following roles: Founder, The New York Times/Yankelovich Poll now known as the New York Times/CBS Poll; Chairman, Educational Testing Service (ETS); Founding President, the Society for the Advancement of Socio-Economics; Trustee, Brown University; Trustee, The Kettering Foundation; Fellow, the American Academy of Arts and Sciences; Member, Council on Foreign Relations, and Director of a number of corporate boards, including CBS; USWEST; the Meredith Corporation; Loral Space and Communications; Diversified Energies and ARKLA.

He has taught as a Research Professor of Psychology at New York University, a Professor of Psychology in the Graduate Faculty of the New School for Social Research, and a Visiting Professor at the University of California at San Diego. He was named a Distinguished Scholar at the University of California at Irvine and served as a Senior Fellow at the Harvard University Kennedy School of Government.

In addition to authoring hundreds of articles and speeches, Daniel Yankelovich is the author, editor or co-author of twelve books, the most recent being Toward Wiser Public Judgment (Vanderbilt University Press, 2011). Others include Profit with Honor: The New Stage of Market Capitalism; The Magic of Dialogue; New Rules: Searching for Self-fulfillment in a World Turned Upside Down; Coming to Public Judgment; Ego and Instinct: The Psychoanalytic View of Human Nature-Revised; Beyond the Beltway: Engaging the Public in U.S. Foreign Policy; and Making Democracy Work in a Complex World, Starting with the People.

He is the recipient of The Parlin Award for his pioneering work in marketing research, the Dinerman Award of the World Association of Public Opinion Research and the Outstanding Achievement Award from the New York Chapter of the American Association of Public Opinion Research.